REGISTERED COMPANY NUMBER: 3858051 (England · PDF file2011-08-31 · REGISTERED...

REGISTERED COMPANY NUMBER: 3858051 (England and Wales)

REGISTERED CHARITY NUMBER: 1077961

Report of the Trustees and

Financial Statements For The Year Ended 31st August 2011

for

Watch Tower Bible and Tract Society of

Britain


Britain

Contents of the Financial Statements

for the Year Ended 31st August 2011

Page

Report of the Trustees 1 to 5

Report of the Independent Auditors 6

Statement of Financial Activities 7

Balance Sheet 8 to 9

Cash Flow Statement 10

Notes to the Financial Statements 11 to 24

1


Britain

Report of the Trustees


The trustees who are also directors of the charity for the purposes of the Companies Act 2006, present their report with

the financial statements of the charity for the year ended 31st August 2011. The trustees have adopted the provisions of

the Statement of Recommended Practice (SORP) 'Accounting and Reporting by Charities' issued in March 2005.

REFERENCE AND ADMINISTRATIVE DETAILS

Registered Company number

3858051 (England and Wales)

Registered Charity number

1077961

Registered office

IBSA House

The Ridgeway

London

NW7 1RN

Trustees

P P Bell - appointed 2.11.11

R Drage

J Dowson

P Ellis

B J Vigo

P S Gillies - resigned 2.11.11

Auditors

Calcutt Matthews Ltd

Chartered Accountants and Statutory Auditor

19 North Street

Ashford

Kent

TN24 8LF

Investment Advisers

Merill Lynch International Bank Ltd

2 King Edward Street

London

EC1A 1HQ

Bankers

Barclays Bank plc

PO Box 12820

London

BX3 2BB

STRUCTURE, GOVERNANCE AND MANAGEMENT

Governing document

The charity is controlled by its governing document, the memorandum and articles of the company dated 25th October

1999.

2


Britain



STRUCTURE, GOVERNANCE AND MANAGEMENT

Recruitment and appointment, induction and training of new trustees

The recruitment and induction of new trustees is arranged as follows: On an annual basis the trustees review potential

candidates. These are required to be appointed as elders in congregations of Jehovah's Witnesses. Their abilities are

evaluated by means of the trustees' personal knowledge of the candidates or by a "personal qualifications report"

provided by elders with knowledge of the individuals. Trustees are given appropriate Charity Commission publications

and training is arranged as part of the meetings of the trustees when the charity's policies are discussed. This is

supplemented by periodic training provided by Calcutt Matthews when new legislation affecting the charity is

introduced. Additionally, arrangements are made for new trustees to attend a comprehensive course that includes

training in legal, organisational, and financial matters.

The trustees of the charity also have key managerial roles at the charity headquarters. They meet several times each

month, and are in regular contact from day to day. Trustees are elected annually, by a simple majority of the members

present at the AGM.

Organisational structure

The charity is a UK company limited by guarantee.

The trustees organise the charity into a number of departments. Each department has an experienced, trained overseer

who makes regular reports to the trustees.

Wider network

Charities with similar objects exist in many countries around the world. During the year, Watch Tower Bible and Tract

Society of Britain (the Society) started to work more closely with one such charity in Germany. Co-ordination is

through the Governing Body of Jehovah's Witnesses, located at their headquarters in the United States.

Related parties

In Britain, the Society works closely with International Bible Students Association (IBSA), which provides the Society

with serviced facilities for its charitable activities. The Society passes to IBSA the cost incurred in printing and

distributing the Bible-based religious literature manufactured and delivered to destinations in the UK and EU on its

behalf, and all other overhead costs.

Risk management

The major risks to which the charity is exposed were reviewed by the trustees in December 2010, and again in October

2011, when the risk register was updated. The update focused particularly on events that would seriously impede the

operations of the charity. Serious risks include catastrophic loss and failure of internal controls. Strategies and

safeguards are in place to reduce, as far as possible, the impact of those risks.

OBJECTIVES AND ACTIVITIES

Objectives and aims

The objects of the Society, contained in its Memorandum and Governing document, are to advance the Christian

religion as practiced by the body of Christians known as Jehovah's Witnesses. This is accomplished by the following

specific sub-objects:

a. promoting the preaching of the gospel of God's Kingdom under Jesus Christ in all nations as a witness to the name,

word and supremacy of the Almighty God, JEHOVAH;

b. producing and distributing Bibles and other religious literature, in any medium, and educating the public in respect

thereof;

c. promoting religious worship;

d. promoting Christian missionary work;

e. advancing religious education;

3


Britain



OBJECTIVES AND ACTIVITIES

Objectives and aims

The major areas of activities for the year in question have been:

1. printing and distributing Bibles and Bible-based literature in several languages, which has served to advance religious

education and educate the general public in spiritual and moral values.

2. supporting congregations of Jehovah's Witnesses and others in Britain with their spiritual and material welfare, by

advancing the Christian missionary work, which has promoted religious worship in local communities.

3. supporting congregations of Jehovah's Witnesses and others abroad, primarily in developing countries, with their

spiritual and material welfare, by making donations to local associations of Jehovah's Witnesses. The donations have

been in the form of literature, goods, and services, as well as of funding for the construction of places of worship. All

such donations have promoted religious education overseas.

Grantmaking

The charity's grant making policy is as follows: From time to time the charity is asked by the Governing Body of

Jehovah's Witnesses to consider helping Jehovah's Witnesses in countries where a need exists. The charity first satisfies

itself that the expenditure will further the religious work of Jehovah's Witnesses, and after confirming that sufficient

funds are available, it then sends the money to the organisation caring for Jehovah's Witnesses in that country. Finally,

reports are obtained to confirm the money was properly used.

Programme related investments

Note 16 to the financial statements explains that at 31 August 2011, £5.3m (2010 £10.7m) had been lent to

congregations of Jehovah's Witnesses in Britain. These interest free loans have been advanced because the objects these

congregations are supporting accord with the objects of the Society, as shown above. During the year the loan to IBSA

was repaid in full.

Workers and volunteers

The charity is run entirely by workers and volunteers drawn from the Christian body of persons known as Jehovah's

Witnesses.

ACHIEVEMENT AND PERFORMANCE

Charitable activities - Producing and distributing Bible literature

The charity's rotary presses have continued to produce The Watchtower and Awake! magazines, as well as other items

of Bible-based literature. In the year, over 428 million publications were printed. These included 153 million copies of

The Watchtower and Awake! magazines, which were printed in 25 and 15 languages respectively. In total, the charity

has sent Bible-based literature to 124 countries in 240 languages. All of the literature produced is used to advance

religious education and educate the general public in spiritual and moral values.

Despite a statutory requirement for print works setting a limit of 30% fugitive volatile organic compound emissions into

the atmosphere in a 12-month period, the Society achieved a reduction from an already low level value of 3.48%

fugitive emissions in 2009 to 2.07% in 2010.

Charitable activities - Promoting Christian Missionary work

In assisting congregations of Jehovah's Witnesses and others in Britain with their spiritual and material welfare, the

charity supports over 80 travelling ministers. These visit the congregations on a regular basis, usually twice a year,

during which they provide pastoral care. One of the primary objectives of these visits is for the travelling minister to

promote the Christian missionary work by providing leadership in the public ministry of Jehovah's Witnesses.

Additionally, the charity supports 140 full-time ministers who assist congregations to which the charity has assigned

them. The assistance provided by these ministers enables local congregations of Jehovah's Witnesses to share fully in

promoting and preaching the good news of God's Kingdom and teaching principles of Christian living. Such principles

include respect for secular authority, persons, and property, and the maintenance of personal morality and family values

and other facets of Christianity.

The charity also runs a training school for qualified ministers to better equip them to render spiritual and pastoral care in

the community. This school, the Bible School for Single Brothers, formerly known as the Ministerial Training School,

gives instruction in Bible teachings and in organisational matters. As a result of such training, some are assigned to

serve where there is a need for ministers here in Britain, whereas others receive assignments in foreign countries.

During the year there were two classes held from which 49 students graduated. 9 of these students came from European

countries. Since the school was inaugurated, 986 students have graduated.

4


Britain



Charitable activities - Making donations to further religious education overseas

During the year the charity continued to provide material and financial assistance to Associations of Jehovah's

Witnesses in several countries, who are responsible for the general oversight of the activities of Jehovah's Witnesses in

that country. The aid, over £20m in total, was given to promote missionary activity, to support general costs of the local

Association, and to assist in the operation of local congregations of Jehovah's Witnesses. Additionally, literature with a

value of over £4.1m was donated overseas, mainly to Africa, for use in advancing religious education.

Humanitarian aid of £107,000 was provided to support the on-going reconstruction after the earthquake that struck

Haiti. These funds were used towards the construction of 1,700 temporary shelters and Kingdom Halls, and the

replacement of those that were destroyed.

Public benefit

As evidenced above, much has been accomplished by the charity in the year to advance its objects for the public

benefit. Literature has been produced to educate the general public in spiritual and moral values. Ministers have been

supported in aiding others to develop personal morality and family values. Places of worship have been financed which

are open to all who wish to benefit from the practical values contained in the Holy Bible. These activities bear out that

the work of the charity continues to benefit both Jehovah's Witnesses and members of the community. The trustees

confirm that they have taken into consideration Charity Commission guidance on public benefit in exercising their

powers or duties.

Internal controls

To ensure the charity is able to achieve its objectives, appropriate internal controls have been established. These ensure

that the monthly financial reports accurately represent all transactions, provide reasonable assurance that finances are

being used for their intended purpose, and verify that proper controls and procedures are in place, and adhered to, so

that figures are recorded accurately and the accounts are in balance.

The internal audit programme has been achieved. The internal auditor and his assistant have a set agenda to pursue

throughout the year, and reported in writing to the trustees in October 2011. Approved recommendations were

implemented.

FINANCIAL REVIEW

Reserves policy

Although the charity has a consistent income base, in light of economic conditions, the trustees have arranged to work

more closely with a similar charity overseas. In view of the resultant good cooperation, it will be possible to reduce the

level of reserves held, while improving the service provided to beneficiaries. At the year-end, free reserves stood at

£21,288,000, which represented 7 months of expenditure (2010: £20,068,000 and 10 months). Because the arrangement

has worked so well, the trustees aim over the current year to reduce the level of reserves held. The trustees feel that such

a policy makes best use of the charity's income, and are confident that it in no way adversely affects the charity's ability

to both sustain and increase its activity.

Principal funding sources

The primary funding activity is the manufacture and distribution of Bible-based religious literature on behalf of IBSA,

the cost of which is passed on. The charity also relies to a large extent on voluntary donations to support its work, and

has a consistent income base through Gift Aid. As mentioned above, the charity has also started working more closely

with a similar charity overseas, and has received substantial grants from this charity, which has committed itself to

provide further funding, as both charities work towards fulfilling their common objectives and aims. In addition, the

charity has an active treasury management department to handle investments it has been bequeathed or converted.

Investment policy and objectives

The Memorandum and Articles, give power to invest funds in any lawful manner having full regard to the suitability of

the investments, the need for diversification, and to be a socially responsible investor having due consideration to the

beliefs of Jehovah's Witnesses. The objective is to preserve capital and achieve a real return of 4% plus inflation. The

portfolio had a negative performance on August 31, 2010 of -4.24%. Given the requirement to be prudent in our

investment approach, achieving a target real return above UK inflation of 4% would have increased risk to the Portfolio.

To reduce risk the Portfolio was diversified by currency and asset class. The Trustees continue to see the wisdom in

holding to the current strategy favouring portfolio diversification both by asset class and currency exposure, having

adequate liquidity and investment quality.

5


Britain



FUTURE DEVELOPMENTS

The charity anticipates being able to continue to have a full share in funding the activities of Jehovah's Witnesses in

other countries and in producing Bible-based publications.

STATEMENT OF TRUSTEES’ RESPONSIBILITIES

The trustees (who are also the directors of Watch Tower Bible and Tract Society of Britain for the purposes of company

law) are responsible for preparing the Report of the Trustees and the financial statements in accordance with

applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Company law requires the trustees to prepare financial statements for each financial year which give a true and fair

view of the state of affairs of the charitable company and of the incoming resources and application of resources,

including the income and expenditure, of the charitable company for that period. In preparing those financial

statements, the trustees are required to

- select suitable accounting policies and then apply them consistently;

- observe the methods and principles in the Charity SORP;

- make judgements and estimates that are reasonable and prudent;

- state whether applicable accounting standards have been followed, subject to any material departures disclosed

and explained in the financial statements;

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the

charitable company will continue in business.

The trustees are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time

the financial position of the charitable company and to enable them to ensure that the financial statements comply with

the Companies Act 2006. They are also responsible for safeguarding the assets of the charitable company and hence for

taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the trustees are aware, there is no relevant information (as defined by Section 418 of the Companies Act 2006)

of which the charitable company`s auditors are unaware, and each trustee has taken all the steps that they ought to have

taken as a trustee in order to make them aware of any audit information and to establish that the charitable company`s

auditors are aware of that information.

ON BEHALF OF THE BOARD:

P. Bell

Trustee

Date: 13 March 2012

6

Report of the Independent Auditors to the Members of


Britain

We have audited the financial statements of Watch Tower Bible and Tract Society of Britain for the year ended

31st August 2011 on pages seven to twenty four. The financial reporting framework that has been applied in their

preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted

Accounting Practice).

This report is made solely to the charitable company's members, as a body, in accordance with Chapter 3 of Part 16 of

the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company's

members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest

extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company and the

charitable company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of trustees and auditors

As explained more fully in the Statement of Trustees' Responsibilities, the trustees (who are also the directors of the

charitable company for the purposes of company law) are responsible for the preparation of the financial statements and

for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and

International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices

Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give

reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or

error. This includes an assessment of: whether the accounting policies are appropriate to the charitable company's

circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant

accounting estimates made by the trustees; and the overall presentation of the financial statements. In addition, we

read all the financial and non-financial information in the Report of the Trustees to identify material inconsistencies

with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we

consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

- give a true and fair view of the state of the charitable company's affairs as at 31st August 2011 and of its

incoming resources and application of resources, including its income and expenditure, for the year then ended;

- have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

- have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Report of the Trustees for the financial year for which the financial

statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to

you if, in our opinion:

- adequate accounting records have not been kept or returns adequate for our audit have not been received from

branches not visited by us; or

- the financial statements are not in agreement with the accounting records and returns; or

- certain disclosures of trustees' remuneration specified by law are not made; or

- we have not received all the information and explanations we require for our audit.

N. M. Hume

Nicholas Hume FCA (Senior Statutory Auditor)

for and on behalf of Calcutt Matthews Ltd

Chartered Accountants and Statutory Auditor

19 North Street

Ashford

Kent

TN24 8LF

Date: 13 March 2012

The notes form part of these financial statements

7


Britain

Statement of Financial Activities

(Incorporating an Income and Expenditure Account)


2011 2010

Unrestricted Restricted Total Total

funds funds funds funds

Notes £ £ £ £

INCOMING RESOURCES

Incoming resources from generated funds

Voluntary income 2 15,426,699 1,963,016 17,389,715 11,616,131

Investment income 3 1,050,572 46,299 1,096,871 736,910

Incoming resources from charitable activities 4

Producing and distributing Bible literature 11,757,244 - 11,757,244 11,340,917

Other incoming resources 5 189,752 - 189,752 743,980

Total incoming resources 28,424,267 2,009,315 30,433,582 24,437,938

RESOURCES EXPENDED

Costs of generating funds

Investment management costs 6 262,088 - 262,088 312,081

Charitable activities 7


Promoting Christian missionary work 579,445 297,716 877,161 992,603

Making donations to further religious education

overseas

24,188,290

107,767

24,296,057

11,907,391

Governance costs 10 11,550 - 11,550 12,000

Total resources expended 37,065,634 405,483 37,471,117 23,606,341

NET INCOMING/(OUTGOING)

RESOURCES

(8,641,367)

1,603,832

(7,037,535)

831,597

Realised gains/(losses) on fixed asset

investments

(2,339,473) - (2,339,473) (674,502)

Net income/(expenditure) (10,980,840) 1,603,832 (9,377,008) 157,095

Unrealised gains/losses on investment assets (436,068) - (436,068) 2,244,134

Net movement in funds (11,416,908) 1,603,832 (9,813,076) 2,401,229

RECONCILIATION OF FUNDS

Total funds brought forward 36,630,092 13,534,315 50,164,407 47,763,178

TOTAL FUNDS CARRIED FORWARD 25,213,184 15,138,147 40,351,331 50,164,407

CONTINUING OPERATIONS

All incoming resources and resources expended arise from continuing activities.

None of the charity's activities were acquired or discontinued during the current and previous years. All gains and losses

recognised in the year are included above. The deficit for the year for Companies Act purposes, comprising the net

outgoing resources for the year together with the realised losses on investments, was £9,377,008 (2010: surplus

£157,095).


8


Britain

Balance Sheet

At 31st August 2011

2011 2010

Unrestricted Restricted Total Total

funds funds funds funds

Notes £ £ £ £

FIXED ASSETS

Tangible assets 13 3,924,815 446,962 4,371,777 4,945,286

Investments

Investments 14 50,149,804 7,000,000 57,149,804 59,701,825

Investment property 15 180,000 - 180,000 -

Programme related investments 16 - 5,347,289 5,347,289 10,659,381

54,254,619 12,794,251 67,048,870 75,306,492

CURRENT ASSETS

Stocks 17 1,288,839 - 1,288,839 1,147,785

Debtors: amounts falling due within one year 18 1,302,810 - 1,302,810 1,985,490

Cash at bank and in hand 3,923,169 2,343,896 6,267,065 4,570,785

6,514,818 2,343,896 8,858,714 7,704,060

CREDITORS

Amounts falling due within one year 19 (4,891,579) - (4,891,579) (5,454,456)

NET CURRENT ASSETS 1,623,239 2,343,896 3,967,135 2,249,604

TOTAL ASSETS LESS CURRENT

LIABILITIES

55,877,858

15,138,147

71,016,005

77,556,096

CREDITORS

Amounts falling due after more than one year 20 (29,333,633) - (29,333,633) (26,244,147)

PROVISIONS FOR LIABILITIES 22 (1,331,041) - (1,331,041) (1,147,542)

NET ASSETS 25,213,184 15,138,147 40,351,331 50,164,407

FUNDS 23

Unrestricted funds:

General fund 25,109,689 36,630,092

Revaluation Reserve 103,495 -

25,213,184 36,630,092

Restricted funds 15,138,147 13,534,315

TOTAL FUNDS 40,351,331 50,164,407


9


Britain

Balance Sheet - continued

At 31st August 2011

The financial statements were approved by the Board of Trustees on 13 March 2012 and were signed on its behalf by:

J. Dowson

Trustee

P. Ellis

Trustee


10


Britain

Cash Flow Statement


2011 2010

Notes £ £

Net cash (outflow)/inflow from operating

activities

26

(6,933,958)

2,154,136

Returns on investments and servicing of finance 27 34,348 27,435

Capital expenditure and financial investment 27 5,122,808 (6,754,143)

(1,776,802) (4,572,572)

Financing 27 3,473,082 362,190

Increase/(decrease) in cash in the period 1,696,280 (4,210,382)

Reconciliation of net cash flow to movement in

net debt

28

Increase/(decrease) in cash in the period 1,696,280 (4,210,382)

Cash inflow/(outflow) from increase/(decrease) in

debt and lease financing

(3,432,763)

(362,190)

Change in net debt resulting from cash flows (1,736,483) (4,572,572)

Other non cash change to net debt - 281,078

Movement in net debt in the period (1,736,483) (4,291,494)

Net debt at 1st September (24,589,378) (20,297,884)

Net debt at 31st August (26,325,861) (24,589,378)

11


Britain

Notes to the Financial Statements


1. ACCOUNTING POLICIES

Accounting convention

The financial statements have been prepared under the historical cost convention, with the exception of

investments which are included at market value, and in accordance with applicable accounting standards, the

Companies Act 2006 and the requirements of the Statement of Recommended Practice, "Accounting and

Reporting by Charities."

Donations receivable

All incoming resources are included in the Statement of Financial Activities (SOFA) when the charity is legally

entitled to the income and the amount can be quantified with reasonable accuracy. No income is deferred.

Donations are from the public, congregations and other similar charities. Donations in the form of assets are

included at the market value on the date of the gift.

Income from Bible literature

Income from literature arises from literature sold to International Bible Students Association (IBSA), a

connected charity, on a cost basis, in line with the charity's objects.

Legacies

Legacies are recognised at the earlier of the date of notification or being received.

Resources expended

Expenditure is accounted for on an accruals basis and has been classified under headings that aggregate all cost

related to the category. The trustees are of the opinion that support costs are best allocated to the cost of

producing Bible literature. Grants offered subject to conditions which have not been met at the year end date

are noted as a commitment but not accrued as expenditure.

Costs of generating funds

These are comprised of investment management costs incurred during the year. The charity does not engage in

fund raising.

Governance costs

Governance costs comprise external audit fees and other fees from consultants. All other administrative costs

are re-charged.

Tangible fixed assets

Fixed assets are valued at cost less depreciation. Assets costing less than £1,000 are not capitalised.

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful

life:

Land - Not depreciated

Buildings - 2% on cost

Plant and machinery - 10%/15% on cost

Motor vehicles - 25 % on reducing balance

Fixtures and fittings - 10% on cost

Impairment reviews are carried out on individual assets when there is some indication that the recoverable

amount of a fixed asset is below its net book value.

Investment property

Investment property is shown at most recent valuation. Any aggregate surplus or deficit arising from changes in

market value is transferred to a revaluation reserve.

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow

moving items.

12


Britain

Notes to the Financial Statements - continued


1. ACCOUNTING POLICIES - continued

Taxation

The charity is exempt from corporation tax on its charitable activities.

Fund accounting

Unrestricted funds can be used in accordance with the charitable objectives at the discretion of the trustees.

Restricted funds can only be used for particular restricted purposes within the objects of the charity. Restrictions

arise when specified by the donor or when funds are raised for particular restricted purposes. Where a restricted

fund has fulfilled its purpose and excess funds remain, the balance will be transferred into unrestricted funds,

provided that this was understood by the donors at the time of their donation.

Further explanation of the nature and purpose of each fund is included in the notes to the financial statements.

Foreign exchange gains and losses

Foreign currency balances have been translated at the prevailing rate on the balance sheet date. Income and

expenditures during the year have been translated at the prevailing rate on the day of the transaction. Gains and

losses arise when foreign currency assets change in value between their purchase and the balance sheet date.

Investments

Investments are valued at market value. All investments listed on a recognised stock exchange are carried at this

value. Unlisted investments are valued using the latest valuation information received from the financial

institutions managing the funds.

Deposits

The Society has an arrangement whereby individuals or congregations of Jehovah's Witnesses can deposit funds

so that the Society can benefit, on the understanding that these funds can be requested back whenever the

depositor wishes. Experience shows that only a small percentage of deposits (approximately 10%) will be called

upon in any one year. In addition, much of the cash received has been moved into fixed asset investments. To

show the total amount of deposits as short-term liabilities would indicate that the charity did not have sufficient

liquid assets to meet its short-term liabilities, which is not the case. The trustees therefore feel it appropriate to

classify these as falling due after more than one year. 10% of the total amount on deposit is classed as a short

term creditor.

Conditional donations

The charity receives some donations where the donor reserves the right to receive the funds back. Experience

has shown that only a small percentage is returned, but prudently the charity provides for fifty percent.

Connected charities

Transactions are on an arms length and accruals basis. Note 24 sets out the relationship with IBSA. Most other

countries have an administrative office of Jehovah's Witnesses.

Grants payable

Grants payable to other institutions are recognised at the point when their payment has been approved by the

trustees.

Other recognised gains and losses

These comprise unrealised and realised gains and losses on investments. Unrealised gains and losses represent

the difference between the market value brought forward (or cost, for assets bought within this financial year)

and the market value at the balance sheet date. Realised gains and losses represent the difference between sales

proceeds and market value brought forward (or cost, for assets bought within this financial year.)

Donated literature received

Literature received is recognised as a donation when it is received, valued at the equivalent of production cost. It

is then held in stock until it is sold.

13


Britain



1. ACCOUNTING POLICIES - continued

Irrecoverable VAT

Irrecoverable VAT is included in the relevant cost headings on the face of the Statement of Financial Activities

and is not shown as a separate item.

2. VOLUNTARY INCOME

2011 2010

£ £

Donations of literature 2,423,982 2,432,819

Legacies 2,473,858 2,075,191

Grants 5,514,047 -

Donations of cash and goods 6,977,828 7,108,121

17,389,715 11,616,131

3. INVESTMENT INCOME

2011 2010

£ £

Rents received 1,958 1,993

Investments listed on a recognised stock exchange 907,550 266,410

Other unlisted securities 130,070 328,840

Deposit account interest 57,293 139,667

1,096,871 736,910

4. INCOMING RESOURCES FROM CHARITABLE ACTIVITIES

2011 2010

Activity £ £

Income from literature sold

to IBSA

Producing and distributing Bible literature

11,757,244

11,340,917

5. OTHER INCOMING RESOURCES

2011 2010

£ £

Foreign currency gains - 634,570

Income from recycling 189,752 109,410

189,752 743,980

14


Britain



6. INVESTMENT MANAGEMENT COSTS

2011 2010

£ £

Portfolio management 262,088 312,081

7. CHARITABLE ACTIVITIES COSTS

Direct costs

Grant funding

of activities

Support costs

Totals

(See note 8) (See note 9)

£ £ £ £


Promoting Christian missionary work 877,161 - - 877,161

Making donations to further religious

education overseas

-

24,296,057

-

24,296,057

8,809,874 24,296,057 4,091,548 37,197,479

8. GRANTS PAYABLE

2011 2010

£ £

Making donations to further religious education overseas 24,296,057 11,907,391

During the year, grants paid to overseas institutions with congruous objectives can be analysed as follows:

By continent:

Cash Goods Literature Totals

£ £ £ £

Europe - 305,833 140 305,973

Africa 16 8,438,873 3,617,785 12,056,674

Asia 247,803 3,256,022 33,748 3,537,573

Americas 107,767 7,352,817 405,904 7,866,488

Other 118,295 409,686 1,368 529,349

473,881 19,763,231 4,058,945 24,296,057

By activity:


£ £ £ £

Promoting Christian missionary work via

the construction of regional headquarters

-

2,291,756

-

2,291,756

Distribution of Bibles and Bible-based

literature

-

-

4,058,945

4,058,945

Supporting regional headquarters in their

administration of Christian missionary

work

473,881

17,471,475

-

17,945,356

473,881 19,763,231 4,058,945 24,296,057

15


Britain



8. GRANTS PAYABLE - continued

Material grants (in the context of grant-making) were made to the following institutions:

Watch Tower Bible & Tract Society of South Africa

Watch Tower Bible & Tract Society, Ghana

Watch Tower Society of Jehovah's Witnesses, Nigeria

Watchtower Bible & Tract Society Of New York, Inc, United States of America

Watch Tower Bible & Tract Society Of Canada

La Torre Del Vigia, A.R., Mexico

Watch Tower Bible And Tract Society, Japan

Equivalent figures for the previous year were as follows:

By continent:


£ £ £ £

Europe 169,135 184,126 1,674 354,935

Africa - 5,619,266 4,736,717 10,355,983

Asia 251,530 368,256 30,729 650,515

Americas 32,197 308,922 192,578 533,697

Other - 11,246 1,015 12,261

452,862 6,491,816 4,962,713 11,907,391

By activity:


£ £ £ £


the construction of places of worship

111,397

-

-

111,397


the construction of regional headquarters

-

1,783,992

-

1,783,992

Distribution of Bibles and Bible-based

literature

-

-

4,962,713

4,962,713

Supporting regional headquarters in their

administration of Christian missionary

work

341,465

4,707,824

-

5,049,289

452,862 6,491,816 4,962,713 11,907,391

9. SUPPORT COSTS

Other

£

Producing and distributing Bible literature 4,091,548

Support costs have been allocated to producing and distributing Bible literature.

16


Britain



10. GOVERNANCE COSTS

2011 2010

£ £

Auditors' remuneration 11,550 12,000

11. NET INCOMING/(OUTGOING) RESOURCES

Net resources are stated after charging/(crediting):

2011 2010

£ £

Auditors' remuneration 11,550 12,000

Depreciation - owned assets 678,247 769,135

Deficit on disposal of fixed asset 8,041 9,774

12. TRUSTEES' REMUNERATION AND BENEFITS

There were no trustees' remuneration or other benefits for the year ended 31st August 2011 nor for the year

ended 31st August 2010.

The trustees confirm that they have not been involved with any transactions of the charity.

The trustees of the Society receive no payments or reimbursements in their capacity as trustees. The trustees are

also workers for IBSA, and as such they receive a monthly allowance of £96 and an annual allowance of £380

per year, along with free board and lodging from IBSA as indeed do all workers.

Trustees' Expenses

There were no trustees' expenses paid for the year ended 31st August 2011 nor for the year ended

31st August 2010.

17


Britain



13. TANGIBLE FIXED ASSETS

Freehold

property

Plant and

machinery

Fixtures and

fittings

Motor

vehicles

Totals

£ £ £ £ £

COST

At 1st September 2010 285,762 8,513,538 301,454 1,705,942 10,806,696

Additions - 78,256 11,192 101,877 191,325

Disposals - (21,814) (89,622) (23,150) (134,586)

Reclassification (86,950) - - - (86,950)

At 31st August 2011 198,812 8,569,980 223,024 1,784,669 10,776,485

DEPRECIATION

At 1st September 2010 44,152 4,647,698 232,567 936,993 5,861,410

Charge for year 4,088 522,406 24,106 127,647 678,247

Eliminated on disposal - (19,459) (85,075) (19,970) (124,504)

Reclassification/transfer (10,445) - - - (10,445)

At 31st August 2011 37,795 5,150,645 171,598 1,044,670 6,404,708

NET BOOK VALUE

At 31st August 2011 161,017 3,419,335 51,426 739,999 4,371,777

At 31st August 2010 241,610 3,865,840 68,887 768,949 4,945,286

14. FIXED ASSET INVESTMENTS

Listed

investments

£

MARKET VALUE

At 1st September 2010 59,701,826

Additions 63,553,154

Disposals (62,655,062)

Revaluations (3,450,114)

At 31st August 2011 57,149,804

NET BOOK VALUE

At 31st August 2011 57,149,804

At 31st August 2010 59,701,826

Total market values of investment assets held at 31 August 2011 are analysed as follows:

Cash and

Liquid assets

Listed

investments

Unlisted

investments

Total

£ £ £ £

Investment assets in the UK 450,362 - - 450,362

Investment assets outside the UK 5,522,984 40,454,155 10,722,303 56,699,442

5,973,346 40,454,155 10,722,303 57,149,804

18


Britain



14. FIXED ASSET INVESTMENTS – continued

Unlisted investments are comprised of various funds and derivatives managed by professional firms and banks.

The valuations are based on the external fund managers' estimates of the underlying assets of the investment

vehicle.

15. INVESTMENT PROPERTY

£

MARKET VALUE

Revaluation 93,050

Reclassification 86,950

At 31st August 2011 180,000

NET BOOK VALUE

At 31st August 2011 180,000

At 31st August 2010 -

Investment property has been valued by the trustees on the basis of the sale price of comparable properties in the

local area.

16. PROGRAMME RELATED INVESTMENTS

Congregation

Loans

Loan to IBSA

Totals

£ £ £

MARKET VALUE

At 1st September 2010 4,534,381 6,125,000 10,659,381

Additions 2,254,485 3,000,000 5,254,485

Disposals (1,441,577) (9,125,000) (10,566,577)

At 31st August 2011 5,347,289 - 5,347,289

NET BOOK VALUE

At 31st August 2011 5,347,289 - 5,347,289

At 31st August 2010 4,534,381 6,125,000 10,659,381

Loan to IBSA

These investments comprised monies advanced as a loan to a connected charity, IBSA, to assist in the purchase

of buildings, thus helping IBSA in achieving its objective of the provision of serviced facilities for the printing

and distribution of Bibles and Bible based literature and the housing of the volunteers engaged in this activity.

The trustees made no interest charge to IBSA on the loan, on the basis that both charities have similar

objects.The loan was fully repaid during the current financial year.

Congregation loans

These investments comprise funds loaned to congregations of Jehovah's Witnesses in Britain for the purpose of

purchasing, constructing or renovating buildings as places of worship. The ability of the congregation to repay

such monies is assessed prior to the funds being extended. All such loans are on an interest free basis. These

loans enable the Society to further its aims of promoting religious education and worship.

19


Britain



17. STOCKS

2011 2010

£ £

Raw materials 112,487 99,594

Motor vehicle spares and consumables 42,089 28,371

Bibles and other literature 1,134,263 1,019,820

1,288,839 1,147,785

18. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2011 2010

£ £

Trade debtors 943,019 1,205,729

Other debtors 358,629 677,902

Prepayments and accrued income 1,162 101,859

1,302,810 1,985,490

19. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2011 2010

£ £

Deposits (see note 21) 3,259,293 2,916,016

Trade creditors 1,243,553 2,183,794

Other creditors 381,233 342,886

Accrued expenses 7,500 11,760

4,891,579 5,454,456

20. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

2011 2010

£ £

Deposits (see note 21) 29,333,633 26,244,147

Deposits comprise monies received from individuals, circuits and congregations and held with the Society until

they have a need. Based on previous experience, it is considered highly unlikely that the entire balance of

deposits will be demanded within the next financial year.

The deposits are given on the understanding that the Society will repay them on demand. This would normally

lead to them being classified as current liabilities. If all of the cash received in respect of these loans was held as

a current asset, then this would be the accounting policy adopted. However, as cash accumulates (from all

sources, including deposits received) the trustees consider it prudent and cost effective to make transfers into

fixed asset investments, both to improve security of principal and return on investment.

The trustees believe that it would be prejudicial to the charity's liquidity to show a current liability for the

creditor (for which no repayment date is known) and to show most of the resultant asset as a fixed asset

investment. The trustees have therefore classified the deposits as long-term creditors in order to show a true and

fair view.

20


Britain



20. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR - continued

Based on requests for repayment over recent financial years, it is anticipated that approximately 10% of deposits

held will be requested back in the next 12 months. The trustees therefore consider it prudent to class 10% of the

balance of deposits as short term creditors..

21. LOANS

An analysis of the maturity of loans is given below:

2011 2010

£ £

Amounts falling due within one year on demand:

Deposits- due within 1 year 3,259,293 2,916,016

Amounts falling between one and two years:

Deposits- due between 1 and 5 years 32,592,926 29,160,163

Less- 10% transferred to short term creditors (3,259,293) (2,916,016)

29,333,633 26,244,147

22. PROVISIONS FOR LIABILITIES

2011 2010

£ £

Conditional donations 1,331,041 1,147,542

£

Provision at 1 September 2010 1,147,542

Provision on new conditional donations received 216,439

Provision released on conditional donations converted into donations (20,940)

Provision released on conditional donations repaid (12,000)

Provision at 31 August 2011 1,331,041

Conditional donations are donations made by individuals on the understanding that they may be recalled should

the donor require such funds in the future. The donor retains an option over their donation until they die or write

to convert it into an outright donation. While it is considered probable that some of these conditional donations

will need to be repaid, it is unknown when this liability will crystallise or how large it will be. The trustees have

therefore prudently made a provision for 50% of the balance of conditional donations as shown above. £24,000

was requested back in 2011 (2010: £8,000). The remaining £1.3 million is a contingent liability.

21


Britain



23. MOVEMENT IN FUNDS

At 1.9.10

Net movement

in funds

At 31.8.11

£ £ £

Unrestricted funds

General fund 36,630,092 (11,520,403) 25,109,689

Revaluation Reserve - 103,495 103,495

36,630,092 (11,416,908) 25,213,184

Restricted funds

Kingdom Hall Construction Worldwide 7,786,327 1,139,702 8,926,029

Travelling Overseers Assistance Arrangement 854,487 240,644 1,095,131

Kingdom Hall Assistance Arrangement 4,704,864 268,444 4,973,308

Relief Fund 188,637 (44,958) 143,679

13,534,315 1,603,832 15,138,147

TOTAL FUNDS 50,164,407 (9,813,076) 40,351,331

Net movement in funds, included in the above are as follows:

Incoming

resources

Resources

expended

Gains and

losses

Movement in

funds

£ £ £ £

Unrestricted funds

General fund 28,424,267 (37,065,634) (2,879,036) (11,520,403)

Revaluation Reserve - - 103,495 103,495

28,424,267 (37,065,634) (2,775,541) (11,416,908)

Restricted funds

Kingdom Hall Construction Worldwide 1,139,702 - - 1,139,702

Travelling Overseers Assistance Arrangement 349,679 (109,035) - 240,644

Kingdom Hall Assistance Arrangement 457,125 (188,681) - 268,444

Relief Fund 62,809 (107,767) - (44,958)

2,009,315 (405,483) - 1,603,832

TOTAL FUNDS 30,433,582 (37,471,117) (2,775,541) (9,813,076)

22


Britain



23. MOVEMENT IN FUNDS - continued

Travelling Overseers Assistance Arrangement

This fund was formerly named the Ministers car fund and was set up for the provision of motor vehicles for

travelling ministers in the British field.

Kingdom Hall Assistance Arrangement

The Kingdom Hall Assistance Arrangement (KHAA) exists to give aid where losses and damages have been

suffered by congregations or individuals. Many congregations and certain individuals pay into this fund on the

understanding that the Society will give them financial assistance in the event of loss or damage to their

property. This fund operates world wide, so that if any one local branch office of Jehovah's Witnesses is unable

to meet the demands on its Kingdom Hall Assistance Arrangement, it can request other branches to contribute

from their own KHAA funds. This creates a contingent liability within the Society's accounts, limited to the

value of the fund locally, currently £5 million.

Kingdom Hall Construction Worldwide

This was set up to provide monies to assist with the purchase of places of worship. It was formerly known as the

Society Kingdom Hall Fund.

Relief Fund

This fund exists for the purpose of giving support to areas experiencing distress or natural disaster.

24. RELATED PARTY DISCLOSURES

The charity has close connections with International Bible Students Association ("IBSA"), which provides

serviced facilities to Watch Tower and which is a registered charity with similar objects. IBSA also has the same

registered office as that of Watch Tower.

During the year, the IBSA purchased literature from Watch Tower amounting to £11,742,370 (2010:

£11,340,917). At the year end, IBSA owed Watch Tower £867,833 (2010: £1,204,150), being the invoice for

August 2011. In the prior year, an administrative error was discovered that had led to IBSA being overcharged

for literature for two years. An estimate of the overcharge (£1.4 million) was included as a creditor on the

balance sheet for 2010. This was fully settled during the current year, therefore no amounts were outstanding at

the year-end in relation to this transaction (2011: £nil).

As an integral part of the charitable activities of IBSA, it provided Watch Tower with serviced facilities to

enable Watch Tower to carry out its charitable activities. During the year, IBSA charged Watch Tower

£4,425,669 (2010: £4,330,053) for these services. At the year end, Watch Tower owed IBSA £387,404 (2010:

£391,556) in respect of these transactions.

IBSA also had a beneficial loan from Watch Tower to assist it in achieving its objectives. The loan was made on

an interest free basis, with no pay back date. The loan was fully paid back during the current year and at the

year-end the balance stood at £nil (2010: £6,125,000). The interest that would be due under normal,

commercial rates has been estimated at £112,000 (2010: £400,000).

25. GOING CONCERN

Following the banking crisis in 2008, the trustees have carried out a review of the stability of assets held with

banks and other financial institutions at the year end. They are satisfied that assets are held in institutions with

only the highest ratings, and no provisions other than those made in the accounts are required.

The trustees are satisfied that they have sufficient liquid funds to run the charity for the foreseeable future.

23


Britain



26. RECONCILIATION OF NET (OUTGOING)\INCOMING RESOURCES TO NET CASH

(OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES

2011 2010

£ £

Net (outgoing)\incoming resources (7,037,535) 831,597

Depreciation charges 678,247 769,135

Loss on disposal of fixed assets 8,041 9,774

Interest received (57,555) (138,433)

Dividends received (1,037,620) (595,250)

Other non-cash donations received (68,199) (240,469)

Fixed assets donated to other charities - 34,437

Increase in provisions (183,499) (287,385)

Movements related to investments 733,812 (342,411)

Movements on conditional donations 394,878 634,340

Increase in stocks (141,054) (123,512)

Decrease/(increase) in debtors 682,680 (528,630)

(Decrease)/increase in creditors (906,154) 2,130,943

Net cash (outflow)/inflow from operating activities (6,933,958) 2,154,136

27. ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT

2011 2010

£ £

Returns on investments and servicing of finance

Interest received 57,555 138,433

Dividends received 1,037,620 595,250

Income kept in fixed asset investments (1,060,827) (706,248)

Net cash inflow for returns on investments and servicing of finance 34,348 27,435

Capital expenditure and financial investment

Purchase of tangible fixed assets (191,325) (322,123)

Transferred to fixed asset investments - (10,000,000)

Programme related investments advanced (5,254,485) (2,219,728)

Sale of tangible fixed assets 2,041 880

Programme related investments repaid 10,566,577 5,786,828

Net cash inflow/(outflow) for capital expenditure and financial

investment

5,122,808

(6,754,143)

Financing

Loans advanced by depositors 7,643,693 4,095,430

Loans repaid to depositors on demand (4,170,611) (3,733,240)

Net cash inflow from financing 3,473,082 362,190

24


Britain



28. ANALYSIS OF CHANGES IN NET DEBT

At 1.9.10 Cash flow At 31.8.11

£ £ £

Net cash:

Cash at bank and in hand 4,570,785 1,696,280 6,267,065

Debt:

Debts falling due within one year (2,916,016) (343,277) (3,259,293)

Debts falling due after one year (26,244,147) (3,089,486) (29,333,633)

(29,160,163) (3,432,763) (32,592,926)

Total (24,589,378) (1,736,483) (26,325,861)

REGISTERED COMPANY NUMBER: 3858051 (England · PDF file2011-08-31 · REGISTERED...

Documents

Transcript of REGISTERED COMPANY NUMBER: 3858051 (England · PDF file2011-08-31 · REGISTERED...